Labour migration as a response to relative deprivation

In this paper we define the relative deprivation of a person with income y as an increasing function of the percentage of individuals in the person's reference group whose income is larger than y. We obtain his satisfaction by adding up the marginal utilities of income over the range of income a person possesses. We model migration from one reference group to another as a response to relative deprivation and satisfaction: We say that a strong incentive to migrate exists if relative deprivation decreases while satisfaction rises with migration and that a weak incentive exists if the individual increases or decreases his satisfaction and deprivation at the same time by migrating. We derive conditions under which different incentives, weak or strong, hold for different individuals. We obtain the result that in general the richest individual in a society will not have a strong incentive to migrate but may have a weak incentive to migrate, whereas the poorest individual may have a strong incentive to migrate and also a weak incentive to migrate. Our analysis enables us to explain several perplexing migratory phenomena, identify income inequality as a distinct explanatory variable of migration and establish an incentive to migrate in situations where the utility-social welfare approach does not.This is a revised version of Harvard University Migration and Development Program, Discussion Paper No. 20. We are indebted to an anonymous referee for helpful comments and suggestions.